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What I have:

I am using SharePoint online which is part of Office 365.

Question:

What is the best size/ratio of a logo in this case?

(Rectangular one, in type of the old version of SharePoint looks bad and is too small).

Is square the solution? or something like 168 x 80 pixels?

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64x64 .png file is recommended. SharePoint will downsize, but you want to avoid any extra scaling enter image description here

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I've used square, and if it's too big SPO will automatically downsize to fit.

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If you really want to change the logo size, you can refer to this article:

http://webbrewers.com/change-logo-size-office-365-sharepoint-2013-public-site/?i=1

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